Real Estate Investor · Las Vegas, NV · Member since 2016 · 399 posts · 260 votes
Well sort of. I have to pay back taxes of $20k and about $1k in back water. And, yes it needs a full rehab but if I did my numbers right after all is said and done I'll be sitting pretty. I close this week so once I do I thought I would keep a this updated regarding the experience including all numbers so the BP community can benefit from my experience. Let me know your questions!
Aurora, CO · Member since 2012 · 2k+ posts · 1k+ votes
10y
No need for onsite management in Ohio, so don't worry about that. I bought a 29 unit in Columbus that was 50% vacant and in a C neighborhood. It's taken 2.5 years but it's starting to do pretty well-- however I certainly did NOT have the experience necessary going in, lol.
I agree that the prospects hinge pretty heavily on the city and neighborhood, but at that price it's probably worth a shot either way and I like the bold approach. I'll look forward to hearing more as the story progresses!
Real Estate Investor · Las Vegas, NV · Member since 2016 · 399 posts · 260 votes
10y
@Brent Coombs Brother, we understand that there are some people doing some shady stuff out there but before you just call someone out I would do a little research, you don't know his structure of how he conducts his business. I don't know @Account Closed personally but as real estate professional I think we would at least have the courtesy to inquire about their business model before making assumptions. In either account this is not the forum for this. This is about how to walk through rehabbing a vacant 18 unit multi family in need of major repairs and nursing it back to a beautiful income producing cash cow. Cheers!
Real Estate Broker · Richland, WA · Member since 2015 · 76 posts · 50 votes
10y
I look forward to following your progress @Omar Merced! After watching a couple of youtube videos of "The Shea Show" I'm hoping your experience goes smoother than that guys day to day life in Detroit. WOW!
This is about how to walk through rehabbing a vacant 18 unit multi family in need of major repairs and nursing it back to a beautiful income producing cash cow. Cheers! "
Omar, I hope to see you in Dayton on Thursday AM ! PM me the address and I will see you then!
Rental Property Investor · Conover, OH · Member since 2016 · 55 posts · 48 votes
10y
Omar, I can meet up today. Let me know when you will be there.
I emailed you earlier in the week so you can let me know through email. I can't post my email address here per BP rules. The email I sent has a hotmail address.
Rental Property Investor · Charleston, WV · Member since 2013 · 262 posts · 109 votes
10y
@Omar Merced Congrats, looks like a fun project. I am just starting looking at some appartments. How do you calculate the ARV, Rehab costs, and how did you negotiate that price?
Real Estate Investor · Las Vegas, NV · Member since 2016 · 399 posts · 260 votes
10y
@Jonathan Johnson The great thing about commercial properties is value is vey straightforward. Really there is only one variable, (I'm probably going to get hammered for this) the capitalization rate. Just so you have an idea. It is pretty straightforward. I conservatively estimated the gross rents, I found most of the other expenses taxes, insurance, water, landscaping, management, etc. and exaggerated the others. Came up with a Estimated Net income and divided it by a very high (once again conservative) cap rate and cam up with the ARV. I might post the actual numbers I used (don't know yet). I have experience in rehab so I estimated the rehab and added a healthy margin for the known (there always is) unknowns subtracted profit and and came up with the MAO. Then I threw that number out the window and asked the seller to give the property to me for the back taxes and kind of went from there. Let me know if you are getting this its all very scientific.
Real Estate Investor · Las Vegas, NV · Member since 2016 · 399 posts · 260 votes
10y
@Jonathan Johnson Good is relative and it depends on your area. If all you properties are selling at 6% and you can get one at 8% then that is good. The higher the cap rate the cheaper it is but doesn't necessarily mean its a good deal because the higher the cap the worse the places are usually. Just as an example I used 12% & 14% and my numbers still looked fine.
Real Estate Investor · Las Vegas, NV · Member since 2016 · 399 posts · 260 votes
10y
Hi BP. Just a little update. It's been a really busy week. So I haven't had time to do too much with this project but here we are. So since we last talked heres whats happened.
Set up an Ohio LLC. Closed title.
Waiting on underwriting for our insurance. (Hint. Do that earlier I procrastinated on this one)
Last week we went to the property and had an open house for contractors. We teamed up with a property manager @Account Closed and she lined up about 30 vendors to come out and give bids. We had a great turn out and have had many turn in proposals and still waiting for some. We had a couple of GCs and the rest were individual trades. From landscapers to electricians to the neighborhood association that looked at us with skepticism. We met some really good people and were impressed by a couple. Over the next two weeks we will be taking a really hard look and choosing the best proposals and sharpening our pencils. I really wanted a GC to handle the whole project but I'm not sure it will work. We will see. There are a lot of pictures so I am posting one here and the rest are here. Pictures.
So one of the units was converted to a mechanical room. That's why it was listed as a 17 unit. The plan so far is converting it back. We are going to try to individualize all units with their own water heater and meter. Remove the boiler and go with a split system or electric base boards. In other words as the owner I am trying to get rid of all shared expenses. If all goes as planned I will be responsible for common lighting which by the way will be high efficiency LED lighting and thats it.
So what's next. I have a call into the the city to talk about the taxes in arrears. Waiting on the final bill from water. Come up with the finalized plan for the rehab. That's all for now. I'll post more soon. Remember to follow the forum for updates.
Investor · Washington, DC · Member since 2016 · 175 posts · 73 votes
10y
Keep in mind electric baseboard heating is one of the most expensive heating systems in terms of energy costs. Granted, this cost will be passed on to the tenant, however, it may effect how much they are willing to pay for rent if they know the electricity bill will be high in the winter. Low temperature hot water baseboards (140F supply) with a condensing boiler and split systems for A/C would probably be the best bet for balancing having the tenant pay for some utilities and not having their bill be super high. I do energy audits for my job :)
Real Estate Agent · Ashburn, VA · Member since 2016 · 107 posts · 31 votes
10y
From looking at the pictures there appears to be lots of work to be done. How long are you anticipating the rehab to take before you start taking renter applications? Very interested to see what you're able to turn this into. Thanks for the update!
Lowell, MA · Member since 2014 · 260 posts · 99 votes
10y
I bought a 12 unit apartment building in Massachusetts eight months ago for $1.2 million. You can't buy a cardboard box in Massachusetts for less than $12,000. My building is in A C+ neighborhood, nothing great at all. It's amazing how just a couple hundred miles away the pricing and the opportunities are totally different. Is it in a crime infested neighborhood and in disrepair? What are the current rental rates in the area? I get $1350 for a two bedroom unit and $1200 for a one bedroom unit
You could set the outdoor units on the roof if you're worried about theft. There would be no ductwork involved, just copper line sets, power/comm wire and drain lines. Utilities would be cheap and there would be no need for mechanical room(s).
Unless your area does not require cooling units, i would stay away from boilers. They are expensive and there is no reason to buy another heating system when you're buying one that is capable of heating and cooling(split air to air system or mini split).
I'd be happy to kick around any other ideas regarding your heating and cooling if you want. I've been in the HVAC distributing business for 14 years now.
I bought a 12 unit apartment building in Massachusetts eight months ago for $1.2 million. You can't buy a cardboard box in Massachusetts for less than $12,000. My building is in A C+ neighborhood, nothing great at all. It's amazing how just a couple hundred miles away the pricing and the opportunities are totally different. Is it in a crime infested neighborhood and in disrepair? What are the current rental rates in the area? I get $1350 for a two bedroom unit and $1200 for a one bedroom unit